OTTAWA, April 21, 2015 – In keeping with its tradition, Raymond Chabot Grant Thornton releases its post-budget tax summary for individuals and business managers. Prepared by a team of firm experts during the lock-up, this document highlights the main tax measures announced by the federal government. This easy-to-consult summary may be downloaded at www.rcgt.com/en/2015-federal-budget.
A budget that paves the way for growth…
Having achieved a balanced budget, the federal government now has more maneuverability to stimulate wealth creation. Raymond Chabot Grant Thornton welcomes the fact that there are no income or commodity tax increases in today’s Economic Action Plan. In fact, there is even a tax decrease. “Be they individuals or businesses, taxpayers have had enough of digging into their pockets. This budget provides a bit of breathing room, particularly for small businesses, the economic motors that are key to our prosperity,” stated President and CEO, Emilio B. Imbriglio.
The firm would like to draw attention to certain measures that support economic growth. For example “the reduction of the small business tax rate to 9% is a positive measure, as is the 10-year investment incentive for manufacturing businesses,” explained Tax Partner, Luc Lacombe. Going forward, manufacturers will be entitled to an accelerated CCA rate of 50%, declining balance, for machinery and equipment purchased after 2015 and before 2016.
Also of note, is the government’s decision to continue providing $5.35 billion per year on average for provincial, territorial and municipal infrastructure under the New Building Canada Plan Force. This measure serves the dual purpose of creating jobs and modernizing the country’s infrastructure. Additionally, it is creating a new Public Transit Fund of $750 million over two years, starting in 2017–18, and $1 billion per year ongoing thereafter.
… but still does not support business transfer tax equity
On the other hand, Raymond Chabot Grant Thornton continues to call for tax equity on intergenerational business transfers for entrepreneurial success in Canada. “In a context where creating a business is by far the most popular option for young Canadians wanting to get into business, the firm considers it is essential to encourage the purchase of existing businesses. It’s crucial that intergenerational business transfers become more equitable from a tax perspective,” Imbriglio added.
Raymond Chabot Grant Thornton has been asking the Canadian government and its Finance Ministers to introduce legislation in this respect since 2010. In its March 26, 2015 budget, the Quebec government announced that, as of 2017, owners of primary or manufacturing sector businesses will benefit from a capital gains exemption in Quebec on the sale of their business to a business owned by their children. The firm would like this tax equity to be extended to businesses in all industry segments in Québec and for the federal government to follow suit quickly so that the tax equity will have a true impact in Canada.
To quote Jean Gauthier, Partner and National Tax Director, “Unfortunately, from a tax perspective, it’s unfavourable for business owners to sell their business to their children rather than to a stranger. For the seller, this results in the loss of the benefit of the capital gains deduction in excess of $800,000, whereas this does not apply in a transaction with a third party,” Gauthier concluded.
The report titled Business Transfers: Problems and Suggested Solutions is available at the following address: www.rcgt.com/business-transfers.
About Raymond Chabot Grant Thornton
Founded in 1948, Raymond Chabot Grant Thornton has become a leader in the fields of assurance, tax, consulting services, and business recovery & reorganization. Its strength is based on a team of over 2,400 people, including some 230 partners in more than 100 offices in Quebec, eastern Ontario and New Brunswick. For over 30 years, Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd, providing clients with the expertise of member and correspondent firms in more than 100 countries.
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